Michael Gartenberg of Jupiter Research has a blog post entitled Zune is Real and Here's What it Means - First Take Analysis where he writes

If you have the current issue of Billboard, there's an article in there as well.

First, this is an acknowledgement that Microsoft is clearly not happy with Apple's dominance in digital music. I don't think it is concern about new growth scenarios. It's more a concern that Apple controls a key endpoint in the digital home and that Apple bits flow only to other Apple controlled bits or devices. That scenario doesn't bode well for Microsoft's larger ambitions Second, even though Microsoft still talks about the diversity of the Windows platform as an overall advantage, let's face it, the platform argument is dead and licensees will have to deal with it. On one hand, no one has ever successful created a business where you license technology to licensees and simultaneously compete with them on the device side. On the other hand, it's not like there's a lot of other places for licensees to go to get technology.

So what's the challenge? Essentially there are three things.

• Creating a technically competent challenger...
• Creating a lifestyle device...
• Creating a platform...

...
Early market share, however, isn't likely to come from disgruntled iPod users looking to switch. The real losers in the short term are likely to be the likes of Creative, iRiver and other former partners that have failed to deliver to market share from Apple and will now find themselves not only competing with Apple but with their former partners from Redmond.

Interesting. As someone who's bought 5 iPods over the past few years (2 for me, 1 for my mom, 1 for my girlfriend and 1 for her daughter) I'm quite the fan of Apple's devices and often walk the hallways at work looking like one of those silhouettes from the iPod ads. I'll definitely take one out for a test drive when I'm shopping for my next music player.  So far nothing has compared to the iPod experience but Microsoft's work with XBox/XBox Live shows the company can compete when it comes to hardware/online service combos.

PS: Isn't it weird how different the results are for http://images.google.com/images?q=ipod+ad vs. http://www.live.com/#q=ipod%20ad&scope=images&lod=2&page=results?